THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

WOLF BLITZER, HOST: Happening now, President Obama rips Republicans for holding up a jobs bill, but his administration admits the economy is still in deep trouble. I'll ask a top white house economic adviser if that means the U.S. could be facing a double dip recession.

And churning in the Atlantic, Hurricane Earl is now a category four hurricane. Could that powerful storm threaten the east coast of the United States heading into the Labor Day weekend? We'll get the latest forecast.

And more than 17 million people are affected by killer floods as the death toll rises, we'll take you to the front lines of the disaster zone where many have nothing left but tears. Our own Dr. Sanjay Gupta is on the scene.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

BLITZER: But we begin with a developing story, breaking news that we are just getting of the arrest of two individuals in Amsterdam shortly after they arrived on a flight from the United States.

Brian Todd is working this story with us.

Brian, what are we hearing? What are we learning?

BRIAN TODD, CNN CORRESPONDENT: Wolf, an official at Schiphol Airport in Amsterdam confirms to us that two men were arrested there today after they received a request from the National Detective Department.

They say an investigation is ongoing. They're not giving us any additional details. What we know from an ABC News report is that two men were taken off a Chicago-to-Amsterdam flight at that airport, charged by Dutch police with -- quote -- "preparation of a terrorist attack."

That's ABC News, citing the law enforcement sources in the United States. Apparently, at least one of them was at least flagged for some bulky clothing and his baggage was checked in Birmingham, Alabama, where he then flew from there to Chicago, and they I guess took a further look at him. And apparently he checked luggage on a flight from Chicago to Washington Dulles with connections to Dubai and then Yemen. This is according to ABC News. But he didn't board that flight himself. Instead, he and another man boarded a flight from Chicago to Amsterdam, indications of a possible dry run. And again some of their baggage was a little bit questionable, but no traces of explosives were found in this bag according to this ABC News report.

(CROSSTALK)

BLITZER: Apparently they found a cell phone taped to a Pepto- Bismol bottle, three cell phones taped together, several watches taped together, a box cutter and three large knives in the checked luggage. Is that...

TODD: In the checked luggage, that's right.

Now, again, and he had some bulky clothing himself, which flagged them. But again they checked all of it out, no traces of explosives, but they wanted to keep an eye on him. This is according to ABC News. They let him go to Chicago. They watched him check that baggage through to Washington Dulles with flights, according to ABC, to then Yemen and Dubai, but he didn't get on that flight, again, raising suspicions there that they may be doing a dry run or something like that.

Again, we're going to get more details later on this.

BLITZER: And they named these two individuals, the ABC report, individuals from Detroit, Michigan, saying that one of them at least was from Yemen originally.

(CROSSTALK)

TODD: That's right.

BLITZER: Let's bring in Tom Fuentes right now and Fran Townsend, our CNN national security contributors.

Tom, you're a former assistant director of the FBI. When you hear the initial sketchy information we're getting right now, what goes through your mind?

The idea that it would be a dry run seems to me to be a little bit silly because they actually don't have explosives. So, the fact that it wouldn't be detected as contraband entering a cargo area of an aircraft would certainly, you know, stand.

There's no reason to ban Pepto-Bismol from being put on airplanes. So the other idea that they could separate from their luggage and take a different flight seems a little bit unusual also. Since they have no trouble recruiting suicide bombers, why would you need to do that? Why not have someone check their own luggage and if they're intent on suicide, go ahead and let it detonate? So, it just seems to be rather almost a futile exercise on their part.

BLITZER: Let me bring Fran Townsend into this discussion.

Fran, it does sound pretty strange to me that someone can board a flight, even though that person's luggage is on another flight and that other flight takes off with all that suspicious luggage. What's going on here?

FRANCES TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: Well, Wolf, the interesting thing is if you look at the ABC report, it appears as though they realized -- the screen folks realized that he didn't get on the plane with the suspicious luggage.

He had sent that on a separate plane. If that's the case and they then pulled that plane back with suspicious luggage on it but not the passenger who checked it, the system actually worked like it was supposed to. That shouldn't happen. They picked it up, and they got that suspicious thing, that suspicious bag back off that plane that was scheduled to go to Washington and then on to the Middle East.

You know, the other interesting thing is our understanding from the ABC report is that he was carrying several thousands of dollars in cash. Not sure why that wasn't picked up in the screening process. That's another key.

Tom is quite right, though. Normally we see al Qaeda operatives involved in suicide missions. This suggests this wasn't a suicide mission itself, but it may have been, just as Tom suggests, a dry run. And so we ought to be pleased that authorities at least picked this up, but I suspect that we will get more facts and more clarity on this as time goes on.

BLITZER: Brian Todd is getting some more information.

What else are you getting, Brian?

TODD: Just a key detail to know from this ABC News report, Wolf, that, as Fran mentioned, when they learned apparently that he wasn't on that plane to Dubai and Yemen, they ordered the plane that was going there with his luggage to return to the gate at Washington Dulles. That plane either didn't take off or didn't get very far. It got back to the airport at Dulles very quickly, where they -- I guess, they took those bags off and screened them further, found no traces of explosives at any time.

But it's just -- it's important to note that they didn't let that back get over to Yemen and Dubai.

BLITZER: Tom Fuentes, it sounds a little bit risky, though. If you're suspicious of two individuals and you check them, you still let them go on a flight to Amsterdam from Detroit, does that sound normal to you, even if you're suspicious of these individuals, to let them board this kind of plane?

FUENTES: That would be true, Wolf, but I'm just not sure what the suspicion was or to what degree they had that they could have prevented them from flying, so -- or order them to have secondary checks. So, I'm not sure -- the term that they were deemed suspicious...

(CROSSTALK)

BLITZER: I meant to say Chicago to Amsterdam, not from Detroit. The individuals, apparently, at least one of them, was from Detroit, but Chicago to Amsterdam.

The only thing I can imagine, Tom, is maybe they wanted to see where these individuals were going, to watch them and see if there was anything that they should follow up on.

FUENTES: I don't think so, since they wanted to go ahead and take them into custody when they arrived there.

So, I think that it's a little bit unusual. Exactly again what was the suspicious in the first place before they boarded and allowed that flight to leave? They might have become more suspicious once that plane was airborne and then realized that maybe they had second thoughts about it and to go ahead and have them go through additional screening upon arrival.

BLITZER: There are always U.S. Marshals, Fran, correct me if I'm wrong, on these international flights. This is a United flight from Chicago to Amsterdam. I assume those U.S. Marshals on that kind of a flight would be watching these suspicious individuals while on board.

TOWNSEND: Certainly, Wolf.

If there were U.S. Marshals on that plane, they would have been tipped to pay special attention to the individuals that authorities thought were suspicious. One can only presume, Wolf, they let them board that flight and let that flight take off because they didn't have a basis to deny them boarding and take them into custody at the time that these individuals got on the flight.

It may be once they realized that they had checked the bags on a different plane with suspicious material in it, that gave them the basis to ask the Amsterdam authorities to take them into custody when the plane landed.

BLITZER: Because, Fran, whenever you find individuals whose checked luggage includes box cutters and knives and cell phones taped together or Pepto-Bismol, whatever else is in there, that raises all sorts of alarm bells.

TOWNSEND: Absolutely. But probably they didn't have anything as I said at the time of boarding that would have been classified as contraband, prohibited materials that might have given them a basis to deny them boarding. Once they realized that there were these suspicious materials, though, it may have given them the basis to take them into custody later.

BLITZER: All right, we will follow up on this story and get more information.

Once again, two individuals apparently arrested on terror-related charges in Amsterdam after they flew from Chicago to Amsterdam on a United flight. Will get more information, share it with our viewers. Stand by.

Meanwhile, Hurricane Earl is now a massive Category 4 hurricane. As it churns its way up the Atlantic, could it threaten the East Coast of the United States just in time for the Labor Day weekend?

CHAD MYERS, CNN METEOROLOGIST: One hundred and thirty-five miles per hour and still getting stronger.

Here are the British Virgin Islands right there. Here would be Charlotte Amalie, the U.S. Virgin Islands there. And there, a massive storm. Now it's getting dark here. The picture is getting dark because literally the sun is going down. So, that's why it's getting dark on the frame.

So, here's kind of the blowup picture here. We will see this one all night long. This one looks at the infrared of the storm. And so the brighter the colors, the more purple, the darker it is and so therefore the colder it is and the higher these storms are. There's the eye of -- right there moving.

Now, Wolf, this thing has been forecast to be turning now for four days. It should be out here in the middle of the Atlantic going nowhere. It refuses to turn and continues to move off to the west. And the forecast still is for it to turn and not really hit the U.S.

But now, finally after many days of it turning here, finally the western edge of the cone is hitting the U.S. so there is still a potential of this coming through, not the middle of the line, we don't care about the middle. We care about where could it go. What's the potential for error, by the time you get three, four, five days out? And the potential for error is Boston, New York, D.C., all the way down to Cape Hatteras, all inside the cone now really for the first time in many days as it's been alive.

And there's a couple of forecasts here. That's 145 miles per hour. That right there, that is 150 miles per hour just north of the Turks and Caicos and east of the Bahamas. So, big waves. These Bahama islands are only 10, 15 feet high. Some of these waves could be 30 or 40 feet. So, there's going to be some damage no matter where it -- plus there will be rip currents even if it does not hit the U.S. There will be rip currents and they will be deadly all the way up and down the East Coast for the Labor Day weekend. BLITZER: So, in other words, if someone like myself for example planning on going to the U.S. Open Saturday and Sunday in Queens, New York, how does that look?

MYERS: Well, there won't be 60-mile-per-hour winds in Queens, but certainly even if the winds are 30 or 40, that affects tennis for sure. The small is just blowing around.

But it will be squally weather. Even though maybe we're talking 200, 300 miles away, you have to realize the arms of this hurricane will be well onto the shore here. So there will be big-time squalls at U.S. Open. I know that's a big event there, but there's going to be some bad weather for that for sure.

BLITZER: All right, we will watch closely together with you, Chad. Thanks very much.

Jack Cafferty is coming up with "The Cafferty File."

Then fire at site of a future mosque, was it arson? New details of the investigation and why one group is calling it a hate crime.

Plus, 17 million people affected and in some parts of Pakistan, the water is still rising. CNN's Dr. Sanjay Gupta is in the disaster zone.

And we will update you on the breaking news we're following this hour. Take a look at this, live pictures of O'Hare Airport in Chicago. Two men were arrested today at Amsterdam after they landed on a flight from O'Hare, the United flight to Amsterdam. We're following this story. Lots of suspicion. Was it terror-related charges involved?

Much more on this story coming up.

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty is here with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: While the United States, Wolf, publicly criticizes corruption in the Afghanistan government, privately, our CIA is making secret payments to multiple members of President Karzai's administration. You can't make this stuff up.

"The Washington Post" has an explosive report on these payments, which in some cases have been going on for what it says a long time. They're meant to help keep the agency many allies within the presidential palace and to provide a flow of information to our intelligence services, since Hamid Karzai himself doesn't always know what is going on inside his own government. What a surprise.

These revelations of these payments to Afghan government officials surfaced at a time when one of Karzai's top national security advisers, also allegedly on the CIA's payroll, is under investigation for corruption, as first reported by The New York Times. Yet, some defend these payments, even if they're going to corrupt government officials, saying they help to achieve U.S. goals in Afghanistan. One American official says -- quote -- "If you want intelligence in a war zone, you're not going to get it from Mother Teresa or Mary Poppins" -- unquote.

The CIA disputes that there are several Afghan officials on the payroll, calling speculation about who can help the United States in Afghanistan dangerous and counterproductive.

President Karzai calls these U.S. media reports irresponsible allegations, saying that they are part of an effort to divert attention away from the fight against terrorism.

Meanwhile, as public support here at home for the war in Afghanistan continues to weaken, the U.S. is trying to show progress there before December, when the White House will reevaluate its mission. Corruption is one of the biggest problems U.S. officials cite with the Afghan government, but it's tough to be too critical if some Afghan officials are being bought by the CIA, isn't it?

Here's the question: What does it mean if the CIA is making secret payments to members of the Karzai government in Afghanistan?

Go to CNN.com/caffertyfile, and post a comment on my blog.

What was it, Wolf? Ten more of our soldiers were killed over there in the last couple of days?

BLITZER: The president is going to be speaking tomorrow night on Iraq, but I suspect he will also make the turn, speak about Afghanistan as well, where there's deep, deep concern, not that there isn't on Iraq.

I'm worried about Iraq as well. But, Afghanistan, there's 100,000 U.S. troops now either there or on the way.

CAFFERTY: Yes. He should go on the air and announce we are getting the hell out of there yesterday, but he won't.

BLITZER: Well, that's another story.

All right, Jack, thank you.

Hours from now, a candlelight vigil will be held in a Tennessee town where a fire destroyed an earth mover and damaged other vehicles at the future sight of an Islamic center. Federal agents are investigating the case, which is viewed as arson.

CNN's David Mattingly is following the story for us.

David, tell us what you know.

DAVID MATTINGLY, CNN CORRESPONDENT: Well, Wolf, Murfreesboro is a long way from New York City, but some think Tennessee Muslims are now getting caught up in the backlash over the proposed mosque near Ground Zero.

Members of this Islamic group in Murfreesboro have been part of the community there for decades and say they never had any trouble until they decided to build a mosque. They ran into some vocal opposition when it became public and now look what happened over the weekend. Someone set fire to one of the pieces of heavy machinery at the construction site.

They haven't built the mosque yet. They just started clearing the land and someone vandalizes the equipment. FBI, ATF, they are both investigating, but so far nothing to say about it. In the meantime, the crime comes in the middle of Ramadan, and Murfreesboro Muslims say they're worried.

(BEGIN VIDEO CLIP)

CAMIE AYASH, SPOKESWOMAN, ISLAMIC CENTER OF MURFREESBORO: hurt. Definitely, within the Islamic community, it has raised the fear factor tremendously, not just with the adults, but especially we see the different type of fear with our children.

It's very hard to explain to children what's going on. It's very hard to explain to the little kids, you know, when they ask you, mommy, are these people for us or against us?

UNIDENTIFIED FEMALE: Right.

AYASH: It -- it's just -- it's really taken a toll on the community.

(END VIDEO CLIP)

MATTINGLY: The Murfreesboro mosque prompted a public protest this summer. The organizer tells me the opposition was originally over the location and the effect the project would have on water quality and traffic congestion.

But there were clearly people in the crowd expressing anti-Muslim opinions. I spoke to the organizer about the recent vandalism. He encourages the public to help law enforcement catch whoever did this.

And he said they want to settle their disagreements through peaceful deliberations and discussion, not vigilantism. Right now, though, Wolf, federal investigators are not saying if they have any leads on who might be responsible or what the motive might be.

BLITZER: David, thanks very much.

We're getting more information on the breaking news we have been following this hour, two individuals, two men arrested in Amsterdam after flying there on a United flight from O'Hare to Amsterdam, under suspicion, potentially of terrorism. We're getting more information. We will update you on what we know. That's coming up.

And Cuba's Fidel Castro speaking out about the illness that forced him to give up power. We have details of his rare interview.

And 17 million people affected by massive flooding in Pakistan. Our own Dr. Sanjay Gupta is on the front lines of the disaster zone.

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: Seventeen million people affected by the massive flooding in the Pakistan right now. In some places, the waters are receding. In others, though, they're still rising. We're on the front lines of the disaster zone with our own Dr. Sanjay Gupta.

It seemed more like a revival than a political rally. Does this weekend's gathering in Washington signal a shift to religion by the TV host Glenn Beck?

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN breaking news.

BLITZER: A dramatic story and the information is only coming into THE SITUATION ROOM right now, sort of sketchy, but we do know this. Two men from the United States have been arrested in Amsterdam on a United flight from Chicago to Amsterdam, supposedly on terror- related charges.

There was suspicious stuff, according to ABC News, found in their luggage, including some -- some large knives and a box cutter, several watches taped together, a Pepto-Bismol bottle taped to a cell phone, three other cell phones taped together.

These individuals are now in custody of Dutch authorities. We're expecting a statement from the TSA, the Transportation Security Administration, and other U.S. officials coming in shortly. Stand by. More information on this incident about to come into THE SITUATION ROOM. We will share it with you once we get it.

Meanwhile, President Obama came out swinging today at Senate Republicans, accusing them of pure partisan politics for blocking a bill to help small businesses. The president says that bill could boost hiring and help lift an economy that the White House frankly is now admitting is still in a deep hole.

Listen to this.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Holding this bill hostage is directly detrimental to our economic growth, so I ask Senate Republicans to drop the blockade.

I know we're entering election season, but the people who sent us here expect us to work together to get things done and improve this economy.

Now, no single step is the silver -- silver bullet that will reverse the damage done by the bubble-and-bust cycle that caused our economy into this slide.

It's going to take a full-scale effort, a full-scale attack that not only helps in the short term, but builds a firmer foundation that makes our nation stronger for the long haul.

But this step will benefit small-business owners and our economy right away. That's why it's got to get done.

(END VIDEO CLIP)

(BEGIN VIDEOTAPE)

BLITZER: And joining us now from the White House, the president's economic adviser Austan Goolsbee.

Austan, thanks very much for coming in.

AUSTAN GOOLSBEE, WHITE HOUSE ECONOMIC ADVISER: Great to see you again, Wolf.

BLITZER: I see a little smile on your face, but a lot of people are very upset about the direction of the economy right now. It's not where you had thought it would be, where the White House thought it would be, where it really should be. What went wrong?

GOOLSBEE: Well, we got some -- we clearly made progress from when we took over and we were losing 600,000, 700,000 jobs a month, but we have now encountered a pretty tough spot. There have been some headwinds coming from Europe, that they have had problems. You've got some other headwinds coming from prolonged difficulties out of the state fiscal situations and the housing market.

And I think the reality is, you know, when you start down in the deepest hole since 1929, you just got to keep on climbing your way out. That's the only way we have got to do it.

BLITZER: I'm looking at this report. It came out in January 2009. Christina Romer, the economic adviser, another economic adviser to the president, said that, if the stimulus package was passed, unemployment wouldn't go above 8 percent. It's now at 9.5 percent and going up. And the other day I interviewed Mark Zandi. You know him. He's a well-known economist. And he said this.

(BEGIN VIDEO CLIP)

MARK ZANDI, CHIEF ECONOMIST, MOODY'S: We're at 9.5. I suspect we'll be back into double digits by the end of the year, early next at the latest.

(END VIDEO CLIP)

BLITZER: Do you expect unemployment to be in double digits? AUSTAN GOOLSBEE, WHITE HOUSE ECONOMIC ADVISER: You know, I try to stay out of the forecasting game, because the -- it seems like all you can do is get in trouble. In the report that you're citing of Romer-Bernstein, I think the thing people miss there is yes, it said stimulus, it would stay at 8 percent, but with no stimulus it would be 9 percent.

Everyone, not just the government: all the private-sector forecasters and Mark Zandi himself missed the fact that the baseline was substantially worse than they could see than it was going to be in January of 2009.

The first quarter of 2009, before the recovery act ever went into effect, was devastatingly bad for the economy, one of the worst performances in the last half century.

BLITZER: Yes.

GOOLSBEE: That is the deep hole I'm talking about we have to climb out of.

BLITZER: It is a hug hole, and I'm looking at the report right now. And she clearly has a line with the recovery plan. The stimulus plan passed with this point in 2010. According to her chart, unemployment should have been about 7.5 percent. It's clearly 9.5 percent and appears to be going even higher in the coming months, if you believe, at least, Mark Zandi. We'll see on Friday what the latest numbers are.

GOOLSBEE: As I said, it's a little misleading, because you're -- she, the government, the Congressional Budget Office and all the private forecasters made the same mistake, which is what would happen with no stimulus was substantially worse.

The president's focus is let's try to release credit to small business. Because at least one of the big things that has happened that made the economy worse than anyone predicted then is that credit market catastrophe had a disproportionate impact on small business, which is normally an engine for growth in a recovery and now is limping along.

So the president has been pushing very hard. Let's pass the small business credit enhancement bill so small business can get back on its feet.

BLITZER: Here's what Paul Krugman, the economist for "The New York Times," Nobel Prize winner, wrote in an article entitled, "This is Not a Recovery": "Tim Geithner, the treasury secretary, says that 'we're on the road to recovery.' No, we aren't. Why are people who know better sugar-coating economic reality? The answer, I'm sorry to say, is that all -- that it's all about evading responsibility." And he goes on to say, "It's time to admit that what we have now isn't a recovery, and do whatever we can to change that situation."

Is he right? GOOLSBEE: Look, I have a lot of respect for Paul Krugman. I've known him for many years. I think that Paul Krugman's argument of the doom and gloom and there ought to be substantially bigger stimulus, there are people then arguing on the opposite side, don't do any more stimulus. Do the opposite and cut spending as quickly as possible.

I think everybody's got to take a step back and take a deep breath. Let's note that, when you start in a deep hole, it is important we identify what are the barriers to getting us out of this hole? And we've got to start working at relieving those barriers.

No. 1 barrier, small business needs to be unleashed. We've got to get that...

BLITZER: Let me interrupt you, Austan, for a second. Is it fair to say that the $800 billion or so economic stimulus package that you got passed did not work out the way you wanted it to?

GOOLSBEE: No, I don't think that that's a fair statement. If you look at the independent Congressional Budget Office, they believe that the -- if it were not for the stimulus, there would be more than 3 million additional people out of work. And that's very much in the range of what was predicted. The thing that we did not understand was that the underlying economy was even worse than they projected it to be in January of 2009.

BLITZER: Let's talk about home sales for a moment. Existing home sales, down 27 percent, the lowest in 15 years. New homes, down 12.4 percent, the lowest on record. Will you ask Congress to pass another tax credit for a home buyer?

GOOLSBEE: Well, look, obviously just taking one month when a thing expired, the point of it was to have an increase. And with its expiration -- and it was effective for that part. With its expiration, it goes down. I don't think you can judge what the long- run state of the housing market is just looking at the one month after the credit expired. I think we need to get a little bit of a longer view on that.

BLITZER: How worried are you about a double-dip recession?

GOOLSBEE: I don't think we will have a double-dip recession, but it's clearly anybody should keep their eye on that. You saw at the Jackson Hole Fed conference in Wyoming, that the Fed is eyeing that. The central bankers from around the world are paying attention to it.

I think if we pass a small business recovery bill, if we do what the president is asking and extend the middle-class tax cuts, and if we go with his export initiative -- he's outlined various ideas to promote exports -- I don't think we will have a double-dip recession. But it's clearly something we've got to -- we've got to be mindful and we've got to prevent.

BLITZER: Austan Goolsbee, joining us from the White House. Thanks very much.

GOOLSBEE: Great to see you again, Wolf.

BLITZER: The aching (ph) economy is certainly taking its toll on a disturbing number of Americans. According to the Labor Department, 14.6 million people are unemployed and searching for work right now. Another 1.2 million so-called discouraged workers, simply given up on looking for a job because they don't think anything is available. And more than 8 million people are working part time but would have preferred a full-time position.

Tens of thousands of people turn out to hear Glenn Beck on the Washington Mall. But the man who made his name talking politics had a very different message. Details of the rally that was more like a religious revival.

Plus a disaster seemingly without end. Water still rising in parts of flood-ravaged Pakistan. CNN's Dr. Sanjay Gupta is there for us.

(COMMERCIAL BREAK)

BLITZER: Just want to update you on the breaking news. Those are live pictures of O'Hare Airport in Chicago right now. We now know that two individuals, two men were arrested on a flight after they landed, on a flight from Chicago to Amsterdam, a United flight with some suspicious cargo, some suspicious material in their bags that actually went on a separate flight. The U.S. authorities are working with Dutch authorities right now.

Apparently, there are terror charges involved. We're getting more information. We'll update you on what we know. ABC News is reporting these two individuals arrested are from Detroit. One of them originally from Yemen.

We'll get more information. Once we do, we'll share it with you.

Meanwhile, some 40 U.S. airmen have been deployed to Pakistan to help with the urgent flood relief operations there. They'll work at a Pakistani air base in Rawalpindi to support air lift operations that are delivering relief supplies throughout the country.

The U.S. military Central Command says that so far U.S. military aircraft have transported more than 2.7 million pounds of supplies and rescued more than 9,000 people within Pakistan.

More than 17 million people have been affected by the monsoon floods that have been ravaging Pakistan now for a month. In some areas the floods are pulling back, but in the south, the water is still rising.

CNN's chief medical correspondent, Dr. Sanjay Gupta, is on the front lines of the disaster zone.

(BEGIN VIDEOTAPE)

DR. SANJAY GUPTA, CNN CORRESPONDENT: Well, it's hard to describe just how much flooding is still ongoing here in southern Pakistan. But I think these pictures may give you a little bit of a clue.

We were in a town about 36 hours ago that was still dry, at a town near Bhatta (ph) City. And we walked through that town. It was dry. We saw the shops, and people kept saying the floods are coming. The water is going to be coming to this area. And frankly, it was hard to believe.

But if you look at these images now, going through this water in a boat, some of the water, 10 to 15 feet deep. Those areas, some of them were just dry just several hours before. That's how fast this floodwater continues to move, even at this time in southern Pakistan. This -- this flooding is ongoing in this part of the country, and I think these pictures really, really describe it. This is happening literally right now.

As you might imagine, getting aid to so many people, hundreds of thousands in this area, millions around the country has been goal No. 1. But some of the video you're looking at now is of how difficult that can be. This is a protest, a demonstration that was really taking place.

What they had done here is they set up a roadblock in the middle of the street, and then when aid trucks started to try to get through, those trucks were ambushed and aid was taken off. You can see some of it thrown to the ground. Some of those medications, never obviously to be used again. But people are so desperate here that they're doing things like this. Eventually, that was broken up by police. But that sort of thing is sure to happen over and over again.

We're at a particular camp here. The reason we're here, this is one of the best-run camps that we have seen. About 3,700 people living here. And they are getting some food. They are getting some water primarily from the Pakistani government. This is a young country. As you remember in Pakistan, so many children at these refugee camps. And I think many of the people watching probably have kids of their own, and it's impossible not to look into the eyes of these children and see your own children's eyes, as well.

They're going to be here for some time to come, for the foreseeable future. Who knows exactly how this ends? Who knows when the waters eventually go away?

Back to you.

(END VIDEOTAPE)

BLITZER: Sanjay Gupta on the scene for us.

To get more information on ways you can make a difference and help provide relief for the flood victims in Pakistan, visit our "Impact Your World" page at CNN.com/impact.

Is Glenn Beck shifting his focus from politics to religion? We're taking a closer look at the impact of his big weekend rally here in Washington on the National Mall. Stay with us. You're in THE SITUATION ROOM. (COMMERCIAL BREAK)

BLITZER: Both his critics and supporters may have been a little bit surprised by Glenn Beck's weekend rally on the Washington Mall. It turned out to be rather light on politics, heavy though on religion.

CNN's Brian Todd is here with more on what was going on.

It was sort of, as some described it, Brian, more of a revival than a political rally.

BRIAN TODD, CNN CORRESPONDENT: It certainly seemed like that, Wolf. And the big question is now, what does it all mean? Where is he taking this?

It's very hard to get a straight answer right now on exactly what's going on with Glenn Beck, whether he's starting a political movie, which he denies, a religious movement, or something else. But when a TV host can draw huge crowds to a rally and get religious leaders to come together with a message, it sure seems like something more organized is afoot.

(BEGIN VIDEOTAPE)

TODD (voice-over): He seems to have shifted from politics to theology.

GLENN BECK, FOX NEWS CHANNEL HOST: God is the answer. He always has been. Look to God and make your choice.

TODD: It wasn't long ago that Glenn Beck was better known for conservative political fire-branding on Fox News Channel.

(on camera): It seems to be a fairly recent swing for him. Is it surprising to you?

BISHOP HARRY JACKSON, HOPE CHRISTIAN CHURCH: Well, at first I was very, very shocked because I was concerned. But I've sat very close to him, a 20, 30-minute discussion, off camera, all that, and I was impressed with the sincerity of the man. And I feel he really has had a personal transformation.

TODD (voice-over): Bishop Harry Jackson leads the Hope Christian Center in the D.C. area. He read scripture on stage at Beck's rally, one of several religious leaders invited.

What's Beck up to? Though his representatives won't discuss his motivations, he has said repeatedly this is not a political movement. .

Dan Gilgoff is co-editor of CNN's "Belief Blog."

DAN GILGOFF, CO-EDITOR, CNN BELIEF BLOG: Beck is calling evangelical ministers with serious theological questions and saying he's moving in a more theological direction. I think it's really hard to discount that entirely. On the other hand, I think Beck, you know, is really up front about being a media personality who needs ratings.

TODD: A Beck representative contacted by CNN would not comment on that for the record. Gilgoff says Beck sees a void in the leadership of the religious right these days with the death of Jerry Falwell and the retirement of Focus on the Family leader James Dobson, and may be looking to fill it.

Religious leaders who have worked with Beck tell us he's simply urging them to get their parishioners to help improve American civil society. "One person, one church, temple or mosque at a time," according to one. It may not always be a unified coalition.

(on camera): You're leading the movement to get gay marriage banned in Washington, D.C. He has said that that's not necessarily a top priority for him.

Can your values and his kind of mesh, and can you work with him?

JACKSON: Well, I can work with anyone who wants to restore the basic values of faith and freedom in America, number one. Number two, I believe that concerning marriage, some of us really have to fight the battle in the courts and in public opinion. I do think that as far as someone who is on a mainstream media show, that if he were to harp on that every day, it probably wouldn't be to his benefit.

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TODD: Now, Beck has the added challenge of the fact that many evangelical leaders who he has reached out to recently don't consider him a Christian because he's Mormon. But those we spoke with say they can all work with him toward impacting the culture and they don't think he has any ulterior motive, political or otherwise -- Wolf.

BLITZER: These Black-Robed Regiments that he's created, what is that all about?

TODD: That may speak to something else though. I mean, they say this on one hand and then he forms the movement like the Black Robes on another.

This is named after the group of clergy who sided with the revolutionaries during the Revolutionary War. One evangelical leader I spoke with who's working with him on all of this says that all Beck wants to them do with this movement is go back to their parishes, recruit people to be better Christians, be better messengers for God and all that, and just kind of start kind of a grassroots movement to improve civil society. He says nothing else is in the wings.

It's vague, on the one hand, general. And yet, you get a sense that there's some other movement, something more organized may be coming down the pike. It's hard to read it at this point.

BLITZER: We'll watch it together with you.

TODD: Got to watch it.

BLITZER: Thanks very much.

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It's a study sure to spark controversy, details of what researchers found out about the mortality rates of heavy drinkers versus non-drinkers.

Plus, a delicate a delicate maneuver in the Gulf of Mexico encounters an unexpected delay. We're following new developments in the Gulf oil disaster.

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BLITZER: A flight from Chicago to Amsterdam ends with terror arrests. John King is following the breaking news right at the top of the hour on "JOHN KING USA." Stand by for that.

And Jack Cafferty is here in THE SITUATION ROOM. He's coming up next.

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BLITZER: Let's get right to Jack for "The Cafferty File" -- Jack.

CAFFERTY: The question this hour: What does it mean if the CIA is making secret payments to members of the Karzai government in Afghanistan?

Dee in Ohio writes, "It means business as usual. Isn't that how we manipulate and control these governments that we help put in power in order to maintain our interests?"

Kevin in San Diego, "Where did all the money from the vaults in Iraq go? Does anyone in government intelligence have an IQ over 60? Unless this country learns that ethics are the first thing needed to create order and a stable society, we are done for."

Cathy writes, "The CIA gets its money from the taxpayers -- right? Let's have a vote. How many taxpayers want to see their dollars go to crooked Afghan government officials?"

Richard in California writes, "It means that we need to pull our people out of Afghanistan as quickly as possible. Karzai and his cronies and whichever goofball U.S. decision-makers have allowed this to go on are not worth a single additional death in that country. Is there anyone left in America who thinks this stupid adventure over there can have a good ending?"

Bill writes, "The CIA pays off politicians overseas and special interests groups and lobbyists in Washington do it here. What's your point?"

Claudia in Houston writes, "It wouldn't cost the CIA a cent for me to secretly tell them that they're not too intelligent if they don't remember their mistake in trusting their paid informant about WMDs in Iraq that got us in this mess in the first place."

If you want to read more about this, you'll find it on my blog at cnn.com/caffertyfile -- Wolf.